ATI Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Sales reached $1.42 billion in Q3 2026, a 26% increase year-over-year (YoY) and 13% increase sequentially from Q2 2026.
• Net income attributable to ATI was $190 million, up 73% YoY and 26% sequentially.
• GAAP diluted earnings per share (EPS) were $1.37, compared to $0.78 in Q3 2025 (76% YoY increase).
• Adjusted net income attributable to ATI was $202 million, up 69% YoY.
• Adjusted EPS was $1.46, compared to $0.85 in Q3 2025 (72% YoY increase).
• Adjusted EBITDA was $328 million, an increase of 46% YoY and 15% sequentially.
• Adjusted EBITDA margin expanded 300 basis points to 23.0% in Q3 2026, compared to 20.0% in Q3 2025.
• Cash provided by operating activities was $154.6 million in Q3 2026.
• Capital expenditures were $92.8 million in Q3 2026.
• Adjusted free cash flow for the year-to-date period ended September 27, 2026, was $222.8 million.
• Managed working capital as a percentage of annualized sales was 32.9% at the end of Q3 2026, a decrease of 140 basis points from Q2 2026.
• Total debt (short-term and long-term) was $1.86 billion as of September 27, 2026 ($49.7 million short-term, $1.81 billion long-term).

Guidance and Future Outlook:

• Raised full-year 2026 adjusted EBITDA guidance by $35 million to a range of $1.190 billion to $1.200 billion (prior guidance: $1.135 billion to $1.185 billion).
• Raised full-year 2026 adjusted EPS guidance to a range of $5.17 to $5.23 (prior guidance: $4.90 to $5.18).
• Raised full-year 2026 adjusted free cash flow guidance to a range of $550 million to $600 million (unchanged from prior guidance).
• Provided Q4 2026 adjusted EBITDA guidance of $345 million to $355 million.
• Provided Q4 2026 adjusted EPS guidance of $1.51 to $1.57.
• Management stated results reflect strong demand backed by long-term agreements and positioned the company for stronger performance in 2027.

Business Segments and Product Lines:

• High Performance Materials & Components (HPMC):
  • Sales were $721.4 million, up 13% YoY and 13% sequentially.
  • Segment EBITDA was $167.3 million (23.2% of sales), down from 24.2% YoY and 24.1% sequentially.
  • Aerospace & defense sales represented 94% of total HPMC sales.
  • Sales growth driven by strong demand and pricing for commercial jet engine products (34% YoY increase) and defense products.
  • Sequential and YoY margin decline attributed to higher manufacturing and period costs, including ramping commercial production of a new nickel-based superalloy.
• Advanced Alloys & Solutions (AA&S):
  • Sales were $702.3 million, up 34% YoY and 13% sequentially.
  • Segment EBITDA was $181.3 million (25.8% of sales), up from 17.3% YoY and 23.7% sequentially.
  • Aerospace & defense sales increased 17% YoY, representing 45% of total AA&S sales.
  • Sales growth driven by higher demand and pricing for commercial jet engine and airframe products; commercial jet engine product sales almost doubled YoY.
  • Margin expansion driven by higher pricing, volumes, and favorable sales mix; Q2 2026 margin included a $9.9 million gain from the sale of a previously closed manufacturing facility.

Market and Competitive Landscape:

• Aerospace & Defense markets accounted for 69% of total sales in Q3 2026 ($994.5 million), with Commercial Jet Engines at 42%, Commercial Airframes at 15%, and Defense at 12%.
• Other markets accounted for 31% of total sales, including Specialty Energy (6%), Conventional Energy (6%), Automotive (6%), Electronics (3%), Medical (2%), and Construction/Mining (3%).
• Management cited differentiated capabilities and long-term agreements as key drivers of market position.

Risks and Challenges:

• Q3 2026 included $14.4 million in restructuring and other charges, including $8.4 million in transformation-related costs, $2.9 million in losses on the sale of customer accounts receivable, $2.2 million in start-up and transaction-related costs, and $0.9 million in restructuring-related costs.
• Q3 2026 included a $1.2 million debt extinguishment charge related to the write-off of unamortized debt issuance costs for the redemption of $350 million of 5.875% Senior Notes due 2027.
• Corporate expenses increased to $18.8 million in Q3 2026 from $14.9 million in Q2 2026, primarily due to a benefit from an insurance claim in the prior quarter.
• Forward-looking statements cite risks including material adverse changes in economic/industry conditions, raw material price volatility, labor disputes, equipment outages, and geopolitical or health-related disruptions.

Management Commentary and Tone:

• Kimberly A. Fields, Board Chair, President, and CEO, described the quarter as "strong," noting the company exceeded the high-end of its guidance.
• Management highlighted three main drivers: strong demand backed by long-term agreements, differentiated capabilities making ATI the partner of choice, and disciplined execution.
• The tone was confident, emphasizing the strength and balance of the portfolio and commitment to delivering on growth outlooks for 2027.

Other Key Points:

• The company repurchased $70.0 million of common stock in Q3 2026 at an average price of $199.62 per share, retiring approximately 0.4 million shares.
• Total share repurchase authorization remaining was $425 million as of the end of Q3 2026.
• The effective income tax rate was 21.0% in Q3 2026, slightly higher than the 20.0% rate in Q2 2026.
• ATI raised full-year 2026 adjusted EBITDA guidance by a cumulative $160 million over the last two quarters ($125 million in Q2, $35 million in Q3).
• GAAP results excluded $15.6 million in pre-tax special items, resulting in a $12.1 million after-tax charge ($0.09 per share).